U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

49–010 

" ! SENATE 113TH CONGRESS

2d Session 

REPORT

2014

113–305 

FIGHTING FRAUD: LESSONS LEARNED FROM 

THE SENATE AGING COMMITTEE’S CONSUMER HOTLINE 

R E P O R T 

OF THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE 

DECEMBER 11, 2014.—Ordered to be printed 


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SPECIAL COMMITTEE ON AGING 

BILL NELSON, Florida, Chairman 

BOB CASEY, Pennsylvania 

CLAIRE MCCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

KIRSTEN GILLIBRAND, New York 

JOE MANCHIN, West Virginia 

RICHARD BLUMENTHAL, Connecticut 

TAMMY BALDWIN, Wisconsin 

JOE DONNELLY, Indiana 

ELIZABETH WARREN, Massachusetts 

JOHN WALSH, Montana 

SUSAN COLLINS, Maine 

Ranking Member 

BOB CORKER, Tennessee 

ORRIN HATCH, Utah 

MARK KIRK, Illinois 

DEAN HELLER, Nevada 

JEFF FLAKE, Arizona 

KELLY AYOTTE, New Hampshire 

TIM SCOTT, South Carolina 

TED CRUZ, Texas 

KIM LIPSKY, Staff Director 

PRISCILLA HANLEY, Staff Director 


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LETTER OF TRANSMITTAL 

U.S. SENATE, 

SPECIAL COMMITTEE ON AGING, 

Washington, DC, December 11, 2014. 

Hon. JOE BIDEN, 

President, U.S. Senate, 

Washington, DC. 

DEAR MR. PRESIDENT: Under the authority of Senate Resolution 

253, agreed to on October 3, 2013, I am submitting to you a report 

of the U.S. Senate Special Committee on Aging entitled: Fighting 

Fraud: Lessons Learned from the Senate Aging Committee’s Consumer Hotline. 

Senate Resolution 4, the Committee Systems Reorganization 

Amendments of 1977, authorizes the Special Committee on Aging 

‘‘to conduct a continuing study of any and all matters pertaining 

to problems and opportunities of older people, including but not 

limited to, problems and opportunities of maintaining health, of assuring adequate income, of finding employment, of engaging in productive and rewarding activity, of securing proper housing and, 

when necessary, of obtaining care and assistance.’’ Senate Resolution 4 also requires that the result of these studies and recommendations be reported to the Senate annually. 

I am pleased to transmit this report to you. 

Sincerely, 

BILL NELSON, Chairman. 


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C O N T E N T S 

Page 

Executive Summary ................................................................................................. 1 

I. Introduction .................................................................................................... 1 

II. Computer Scams ............................................................................................ 4 

III. Grandparent Scams ....................................................................................... 6 

IV. Health-Related Scams ................................................................................... 8 

V. Identity Theft ................................................................................................. 10 

VI. Lottery Scams ................................................................................................ 12 

a. Jamaican Lottery Scams ...................................................................... 13 

VII. Social Security Fraud .................................................................................... 17 

VIII. Timeshare Scams ........................................................................................... 18 

IX. Fraud Involving Guardianship ..................................................................... 19 

X. Conclusion ...................................................................................................... 20 


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113TH CONGRESS REPORT " ! SENATE 2d Session 113–305 

FIGHTING FRAUD: LESSONS LEARNED FROM THE 

SENATE AGING COMMITTEE’S CONSUMER HOTLINE 

DECEMBER 11, 2014.—Ordered to be printed 

Mr. NELSON, from the Special Committee on Aging, 

submitted the following 

R E P O R T 

EXECUTIVE SUMMARY 

Recognizing the epidemic of fraud perpetrated against seniors in 

the United States, and the extent to which the victims of fraud are 

often unsure of where they should turn for help, the United States 

Senate Special Committee on Aging launched a Fraud Hotline in 

November 2013. In the Hotline’s first year, Committee staff has responded to more than 1,900 reports of fraud impacting seniors. 

Categories of fraud commonly reported to the Hotline included 

phone scams, such as international lottery scams and impostor 

scams, identity theft, Social Security fraud and tax-related fraud. 

Every day, the Hotline not only shares valuable information with 

older Americans and their loved ones who reach out for assistance, 

but it also provides crucial information to the Committee by offering a real-time glimpse into the nature and variety of scams targeting seniors—information the Committee has used to better focus 

its investigations, hearings and efforts to educate and protect older 

consumers. 

I. INTRODUCTION 

In the 113th Congress, the U.S. Senate Special Committee on 

Aging has pursued an aggressive agenda aimed at protecting older 

Americans from fraudulent and deceptive practices. As Chairman 

and Ranking Member of the Committee, Senators Bill Nelson and 

Susan Collins have held hearings to examine a variety of scams 

often targeted at seniors. At the beginning of 2013, the Committee 

focused its attention on the Jamaican lottery scam, a widespread 

scheme in which fraudsters lead victims to believe they have won 

a lottery but must pay upfront fees or taxes before their winnings 


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1 U.S. Senate Special Committee on Aging, 876-SCAM: Jamaican Phone Fraud Targeting Seniors (March 13, 2013) (online at http://www.aging.senate.gov/hearings/hearing-876-scam-jamaican-phone-fraud-targeting-seniors) 2 U.S. Senate Special Committee on Aging, Tax-Related Identity Theft: An Epidemic Facing 

Seniors and Taxpayers (April 10, 2013) (online at http://www.aging.senate.gov/hearings/tax-related-identity-theft-an-epidemic-facing-seniors-and-taxpayers) 3Taxpayer Advocate Service, 2012 Annual Report to Congress (Dec. 31, 2012) (online at http:// 

www.taxpayeradvocate.irs.gov/userfiles/file/2012-Annual-Report-to-Congress-Executive-Summary.pdf) 4 U.S. Senate Special Committee on Aging, Social Security Payments go Paperless: Protecting 

Seniors from Fraud and Confusion (June 19, 2013) (online at http://www.aging.serate.gov/hearings/social-security-payments-go-paperless-protecting-seniors-from-fraud-and-confusion) 5 U.S. Senate Special Committee on Aging, Preventing Medicare Fraud: How Can We Best Protect Seniors and Taxpayers? (March 26, 2014) (online at http://www.aging.senate.gov/hearings/ 

preventing-medicare-fraud-how-can-we-best-protect-seniors-and-taxpayers) 6 U.S. Senate Special Committee on Aging, Exploring the Perils of the Precious Metals Market 

(April 30, 2014) (online at http://www.aging.senate.gov/hearings/exploring-the-perils-of-the-precious-metals-market) 7 U.S. Senate Special Committee on Aging, Pushing the Envelope: Publishers Clearing House 

in the New Era of Direct Marketing, Senate Report 113–153 (April 11, 2014) (online at: http:// 

www.aging.senate.gov/imo/media/doc/PCH_REPORT_4_20141.pdf) 8 U.S. Senate Special Committee on Aging, Hanging Up on Phone Scams: Progress and Potential Solutions to this Scourge (July 16, 2014) (online at http://www.aging.senate.gov/hearings/- 

hanging-up-on-phone-scams-progress-and-potential-solutions-to-this-scourge) 9 U.S. Senate Special Committee on Aging, Private Industry’s Role in Stemming the Tide of 

Phone Scams (Nov. 19, 2014) (online at http://www.aging.senate.gov/hearings/private-industrysrole-in-stemming-the-tide-of-phone-scams) 10 AARP, AARP Foundation National Fraud Victim Study (March 2011) (online at http://assets.aarp.org/rgcenter/econ/fraud-victims-11.pdf) 

can be released.1 The following month, the Committee held a hearing to explore ways to combat tax-related identity theft,2 a crime 

that grew rapidly from 2008 to 2012, according to the Internal Revenue Service Taxpayer Advocate Service.3 The Committee then 

held a hearing to spotlight the targeting of Social Security benefits 

by identity thieves in which it examined steps the Social Security 

Administration (SSA) and the Department of Treasury were taking 

to combat this fraud.4

In March of 2014, the Committee examined fraud in the Medicare program and ways in which fraud prevention measures might 

be strengthened to protect seniors and taxpayers.5 The following 

month, the Committee released the findings of a year-long Committee staff investigation into unscrupulous precious metals firms 

and held a hearing to explore its findings.6 Also in April of 2014, 

the Committee released an investigative report that detailed potentially widespread deception in the promotion of sweepstakes popular among seniors.7

In July of this year, the Committee revisited the scourge of 

phone scams, with particular emphasis on the grandparent scam— 

in which a con artist impersonates a family member or friend—and 

heard testimony from the Federal Bureau of Investigations (FBI) 

and Federal Trade Commission (FTC) about their efforts to track 

down the fraudsters.8 Most recently, the Committee examined the 

role of the private sector in stemming the tide of phone scams.9

As the Committee has examined this array of scams in its investigations and hearings, two issues that have arisen repeatedly include the frequency with which victims do not report fraud and the 

difficulty they encounter in determining where they should turn 

when they wish to report a scam to law enforcement. These concerns are not new, but rather, they are well documented. For example, an AARP study found that 75 percent of victims age 55 and 

over did not report the fraud.10 A study by the National White ColVerDate Sep 11 2014 02:11 Jan 01, 2015 Jkt 049010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR305.XXX SR305

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11 National White Collar Crime Center, The 2010 National Public Survey on White Collar 

Crime (Dec. 2010) (online at http://www.nw3c.org/docs/publications/2010-national-public-surveyon-white-collar-crime.pdf?sfvrsn=8) 12Federal Trade Commission, Immediate Steps to Repair Identity Theft (August 2012) (online 

at http://www.consumer.ftc.gov/articles/0274-immediate-steps-repair-identity-theft) 13Steve Mencher, Taking a Bite Out of Fraud, AARP Bulletin (Jan.–Feb. 2014), p. 6. 

lar Crime Center found that, even when victims did report a scam, 

only 12 percent reported to a criminal justice entity.11

In the context of these concerns, the Committee launched its 

Fraud Hotline, an innovative resource to which individuals can report instances of fraud or scams affecting seniors. The Hotline is 

consistently staffed during business hours with investigators who 

have experience with investment scams, identity theft, bogus 

sweepstakes and lottery schemes, Medicare and Social Security 

fraud and a variety of other scams of which seniors are often the 

victims. 

The Hotline seeks to assist individual consumers by providing 

callers with personalized advice regarding steps that can be taken 

when a senior is the target of a scam, including where to report 

the fraud and ways to reduce the likelihood that the senior becomes a victim or repeat victim. Seniors are typically referred by 

investigators to the local, state and/or federal law enforcement entities with jurisdiction over the particular scam. In addition to law 

enforcement, Committee staff may also direct seniors to other resources, such as consumer protection groups, legal aid clinics, Congressional caseworkers or local nonprofits that provide aid to seniors. 

When appropriate, seniors are also provided with steps they can 

take to reduce the likelihood that they become victims or repeat 

victims. For example, when a senior reports an instance of identity 

theft, he may be advised to place a fraud alert on his credit report 

with a major, national credit bureau; order free credit reports to 

ensure that he is aware of all attempts to fraudulently open accounts using his identity; contact his bank, credit card company or 

any other financial institution; and create an identity theft affidavit by reporting the theft to the FTC and filing a police report.12

The victim should also report it to the Internal Revenue Service 

(IRS), who will flag his account and take precautions against someone fraudulently filing a tax return. 

Meanwhile, the Hotline allows the Committee to keep a detailed 

and current record of common fraud schemes impacting seniors, 

which informs the efforts of the Committee, and ultimately the 

work of the U.S. Congress. With the goal of protecting the hardearned life savings of older Americans, the Committee has used information gained through the Hotline to inform its investigations, 

hearings and efforts to educate older consumers—and to bring 

greater awareness to the epidemic of fraud perpetrated against our 

nation’s seniors. 

The resources offered by the Hotline were highlighted in numerous news articles across the country, including the January/February 2014 AARP Bulletin, which described the Hotline as a new 

effort aimed at shrinking the estimated $2.9 billion that older 

Americans lose to fraud each year.13 Additionally, the New York 

Times featured the Hotline in a November 2013 article that explained that the resource ‘‘will give harried seniors and family 

members another place to turn besides local law enforcement, the 


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14Paula Span, A New Way to Report Fraud, New York Times (Nov. 26, 2013) (online at http:// 

newoldage.blogs.nytimes.com/2013/11/26/a-new-way-to-report-fraud/ 

?_php=true&_type=blogs&_r=0) 15See, e.g., Sheryl Harris, Senate Aging Committee Creates Fraud Hotline for Seniors: Plain 

Dealing, cleveland.com (Nov. 19, 2013) (online at http://www.cleveland.com/consumeraffairs/ 

index.ssf/2013/11/senate_aging_committee_creates.html); Senate Aging Committee Launches 

Anti-Fraud Hotline: 1–855–303–9470, St. John Valley Times (Nov. 13, 2013) (online at http:// 

www.sjvalley-times.com/view/full_story/24048871/article-Senate-Aging-Committee-launches-antifraud-hotline—1–855–303–9470); and Alejandra Matos, Senate Launches Anti-Fraud Hotline for 

Seniors, Star Tribune (Jan. 20, 2014) (online at http://www.startribune.com/local/blogs/ 

241188101.html) 

Federal Trade Commission and adult protective services agencies.’’ 14 The Hotline was also featured in various local publications.15 Since its November 2013 launch, the Hotline has already 

responded to more than 1,900 individuals over the phone or 

through its online form. 

This report serves as an overview of scams reported to the Hotline. The most common fraud schemes are highlighted, with a description of the scam and real-life stories of victims from across the 

country. Victims’ names have been changed to protect their confidentiality and prevent the possibility of revictimization. It should 

be noted that some victims’ experiences overlap into multiple categories of scams. For example, once an individual becomes the victim of identity theft, his information may also be used to commit 

fraud by redirecting his Social Security payment or by claiming his 

tax refund. 

The most common scams reported to the Hotline include: • Computer scams; • Grandparent scams; • Health-related scams, especially medical alert device 

scams; • Identity theft, including reports of tax-related identity 

theft; • Lottery scams, including reports of the Jamaican lottery 

scam; • Social Security fraud; • Timeshare scams; and 

In addition to these categories, the Hotline has received more 

than 800 miscellaneous consumer complaints, which include many 

reports of deceptive business practices. The Hotline has also received a number of reports regarding guardianship issues, which 

typically involve financial abuse of a senior. 

II. COMPUTER SCAMS 

Increasingly, fraudsters have utilized computers to acquire personal information from victims. They often target seniors, who may 

be less technologically savvy than younger consumers. In a common 

variation of the scam, often referred to as a ‘‘tech support’’ scam, 

fraudsters gain the victim’s trust by pretending to be from a wellknown technology company, such as Microsoft, Dell or McAfee, 

claiming they can stop an impending computer hack or virus. In a 

typical variation of the scam, the fraudster will direct the senior to 

a screen on his computer that displays an activity log of the system, which the scammer will claim shows that the computer has 

been compromised. In reality, what is displayed on this screen is 

normal and does not indicate that there is any problem. Preying on 

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16FTC, Consumer Information: Tech Support Scams (Jan. 2014) (online at http:// 

www.consumer.ftc.gov/articles/0346-tech-support-scams) 17FTC, FTC Halts Massive Tech Support Scams (Oct. 3, 2012) (online at http://www.ftc.gov/ 

news-events/press-releases/2012/10/ftc-halts-massive-tech-support-scams) 18FTC, Federal Court Orders Tech Support Scammers to Pay More Than $5.1 Million (July 

24, 2014) (online at http://www.ftc.gov/news-events/press-releases/2014/07/federal-court-orderstech-support-scammers-pay-more-51-million) 19The Internet Crime Complaint Center, About IC3 (online at http://www.ic3.gov/about/default.aspx) 20The Internet Crime Complaint Center, 2013 Internet Crime Report (May 2014) (online at 

http://www.nw3c.org/docs/IC3-Annual-Reports/2013-ic3-internet-crime-report.pdf?sfvrsn=4) 21FTC, Consumer Information: Phishing (Sept. 2011) (online at http://www.consumer.ftc.gov/ 

articles/0003-phishing) 

mote access to a computer in order to fix the so-called emergency. 

Once they have gained access to the device, hackers will change the 

computer’s settings to increase the computer’s vulnerability, enroll 

the victim in worthless computer warranty programs, request credit card information to bill for supposed computer protection services, install malware to steal sensitive data or personal information 

and/or direct a victim to a fraudulent website to purchase software 

with a credit card.16

In October 2012, the FTC announced an international crackdown 

on tech support scammers, charging six operations, mostly based in 

India, with contacting consumers over the phone and pretending to 

be from legitimate computer companies.17 The scammers tricked 

consumers into believing their computers were riddled with 

malware and then charged them to ‘‘fix’’ the problems. According 

to the FTC, the companies utilized 80 different domain names and 

130 different phone numbers. Earlier this year, a U.S. District 

Court ordered the scam operators to pay more than $5.1 million.18

Depending on the extent of a computer scam victim’s experience, 

investigators may direct the victim to several resources, including: • The Internet Crime Complaint Center, also known as IC3, 

which is a partnership between the FBI and the National 

White Collar Crime Center.19 The IC3 receives Internet-related 

complaints and refers them to federal, state, local or international law enforcement and/or regulatory agencies for whatever investigation they deem to be appropriate. The IC3 also 

provides information on current Internet schemes. In its 2013 

annual report, the IC3 noted that the total combined losses for 

individuals over the age of 60 from reported Internet-related 

scams in 2013 were $160,129,686; 20 and • The FTC, which is a beneficial resource for victims who 

would like more information on current Internet scams. The 

FTC also manages a scam email account for those who would 

like to report phishing emails.21

The Hotline has received a number of reports of computer scams, 

including the following stories: • Margaret, a Florida resident, called the Hotline with concern 

about her husband, who was the victim of a computer scam. A 

fraudster, who claimed he was calling on behalf of Microsoft, contacted Margaret’s husband and convinced him to send $400 via 

Western Union money transfer to pay for virus protections services. 

Margaret requested that an investigator speak to her husband to 

give him information about the prevalence of these scams and advice on how he might protect himself in the future. Like many seniors who contact the Hotline, Margaret’s husband was very embarrassed about what had occurred. An investigator spoke with 


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22Federal Bureau of Investigations, The Grandparent Scam: Don’t Let it Happen to You (April 

2, 2012) (online at http://www.fbi.gov/news/stories/2012/april/grandparent_040212) 23Green Dot, About MoneyPak (online at https://www.moneypak.com/AboutMoneyPak.aspx) 24FTC, Consumer Sentinel Network Data Book for January–December 2013 (Feb. 2014) (online 

at http://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2013/sentinel-cy2013.pdf) 25 U.S. Senate Special Committee on Aging, Hanging Up on Phone Scams: Progress and Potential Solutions to this Scourge (July 16, 2014) (online at http://www.aging.senate.gov/hearings/- 

hanging-up-on-phone-scams-progress-and-potential-solutions-to-this-scourge) 

Margaret’s husband and explained the prevalence of this scam and 

ways he might protect himself in the future. She was also encouraged to report the scams to the FTC. • Steven, from Boston, Massachusetts, received a phone call 

from a scammer posing as a representative from Microsoft. The 

scammer claimed Steven’s computer needed maintenance. The 

scammer was able to gain remote access to his computer and 

showed Steven a list of files that supposedly needed to be removed. 

Steven provided the scammer with his debit card information to 

pay for $10 service fee. Later, Steven realized that he had actually 

been charged $800. He contacted his bank to report the scam, but 

he was informed that the bank would be unable to recover his 

money. He is still receiving phone calls from fraudulent computer 

companies claiming he needs additional maintenance on his computer. An investigator encouraged Steven to report the scam to the 

FTC. The investigator also explained that Steven could contact his 

phone service provider to inquire about blocking some of the numbers from which he is still receiving the harassing calls. • Bill from New York was scammed out of $750 after he received 

a phone call from someone claiming he had a virus on his computer 

that needed to be removed. After gaining remote access to his computer, the scammer convinced him to send a check to an address 

in Arizona. Bill did not realize that he was the victim of a scam 

until after the check had been cashed, and he has been unable to 

recover any of the money. Bill had already reported the scam to the 

New York Attorney General’s office, which was looking into the 

matter, but he wanted to also make the Committee aware of this 

scam. 

III. GRANDPARENT SCAMS 

The Committee has received an alarming number of reports of 

scammers posing as a family member in need of help. Scammers 

claim they are with a family member, often a grandchild, who is 

in urgent need of money to cover medical care or fix a legal problem, such as money for bail or legal services after a supposed arrest. Scammers may obtain personal family information from social 

networking sites, which they use to make their stories more convincing.22 In many cases, scammers will ask a victim to send 

money via a wire transfer service or purchase a prepaid debit product, such as the Green Dot MoneyPak.23 The FTC categorizes 

grandparent scams as a subset of scams known as impostor scams. 

Impostor scams were the fourth most prevalent scam in 2013, with 

a total of 121,720 incidents reported to the FTC.24

The Committee held a hearing on July 16, 2014, to examine the 

role of the federal government, especially the FTC and FBI, in combating phone scams, with particular attention paid to the grandparent scam.25 An Ohio grandfather explained how he lost $7,000 


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26 Cincinnati.com, Local Testifies About ‘Grandparent Scam’ Before Senate (July 16, 2014) (online at http://www.cincinnati.com/story/news/crime/2014/07/16/cincinnati-man-grandparent-scamsenate/12762055/) 27Matthew Goldstein, MoneyPak, a Popular Prepaid Money Card, Opens Path to Fraud 

Schemes (July 31, 2014) (online at http://dealbook.nytimes.com/2014/07/31/popular-prepaidmoney-card-opens-path-to-fraud-schemes/?_php=true&_type=blogs&_r=0) 28See Vanilla Reload, How Reload Works (online at https://www.vanillareload.com/howitworks) 29See Reloadit, How it Works (online at https://www.reloadit.com/HowItWorks) 30 U.S. Senate Special Committee on Aging, Hanging Up on Phone Scams: Progress and Potential Solutions to this Scourge, Opening Statement of Chairman Nelson (July 16, 2014) (online 

at http://www.aging.senate.gov/imo/media/doc/Nelson_7_16_14.pdf) 31 U.S. Senate Special Committee on Aging, Private Industry’s Role in Stemming the Tide of 

Phone Scams, Testimony of Skeet Rolling and William Y. Tauscher (Nov. 19, 2014) (online at 

http://www.aging.senate.gov/hearings/private-industrys-role-in-stemming-the-tide-of-phonescams) 

after he received a call from someone impersonating his grandson 

and claiming he had been arrested and needed bail money immediately.26 The victim transferred money to the fraudsters using 

Green Dot MoneyPaks, which are PIN-based reload cards that 

allow a scammer to remotely receive payment from a victim in a 

manner that is very difficult to trace. Last year, Americans reported losing $42.86 million to schemes involving prepaid products.27 The MoneyPak is the prepaid reload card of choice for many 

scammers and a product the Committee has examined closely, 

along with two corresponding products: InComm’s Vanilla Reload 28

and Blackhawk Network’s Reloadit Pack.29 During the hearing, 

Chairman Nelson announced that Green Dot would be discontinuing their MoneyPak product in the coming months.30 Additionally, InComm recently announced that it would also be pulling 

its Vanilla Reload in the first quarter of 2015, and Blackhawk 

shared with the Committee its plans to introduce enhanced security features.31

Resources to which victims of grandparent scams are referred include: 

• State Attorneys General; 

• State consumer protection agencies; 

• Local law enforcement authorities; 

• The Department of Homeland Security’s Immigration and 

Customs Enforcement (ICE) tip line; and 

• The FTC. 

Committee staff continues to explore what can be done to help 

seniors defend against fraudulent calls before they pick up the 

phone. 

Grandparent scam victims have reported the following stories 

through the Hotline: 

• Mary, who lives in Illinois, received a phone call from a 

scammer posing as her grandson. He claimed he was on vacation 

in the Dominican Republic and was calling because he had been arrested for drug possession. He pleaded that she keep the arrest a 

secret from his parents until he was safe. The scammer sounded 

just like her grandson and gave Mary specific directives on what 

she should say at the bank in order to withdraw a significant 

amount of money without raising suspicions. The scam continued 

to evolve, and he later asked for money for a lawyer. In the end, 

Mary lost over $25,000. She had already reported the scam to local, 

state and federal law enforcement, but she had been unable to recover any money. She contacted the Hotline to share her story so 


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32Department of Health and Human Services, Center for Medicare & Medicaid Services, 

Medicare Fraud & Abuse—Prevention, Detection, and Reporting (Aug. 2014) (online at http:// 

www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/ 

downloads/Fraud_and_Abuse.pdf) 33Merrill Matthews, Medicare and Medicaid Fraud is Costing Taxpayers Billions (May 2012) 

(online at http://www.forbes.com/sites/merrillmatthews/2012/05/31/medicare-and-medicaid-fraudis-costing-taxpayers-billions/2/) 34 U.S. Senate Special Committee on Aging, Preventing Medicare Fraud: How Can We Best 

Protect Seniors and Taxpayers? (March 26, 2014) (online at http://www.aging.senate.gov/hearings/preventing-medicare-fraud-how-can-we-best-protect-seniors-and-taxpayers) 

that others could be educated and avoid the difficulty she had experienced. 

• Emily in Louisiana received a phone call from a scammer who 

she believed was her son. The scammer said he was in jail in Mexico City and asked Emily to contact a bail bondsman as soon as 

possible. Emily sent the scammers $20,000. The next day, Emily 

received a phone call from her son, who was at home in California. 

He informed her that he was never in Mexico City. Emily contacted 

the Hotline in search of guidance on what law enforcement entities 

might be able to investigate this crime. An investigator provided 

Emily with the contact information for the ICE tip line, the FTC 

and her state Attorney General to report the scam for further investigation. 

• Mark’s grandmother, a resident of California, was contacted by 

an individual claiming to be from the United States Embassy in 

Mexico. He alleged that Mark had been arrested on drug charges. 

The scam went on for over a month and Mark’s grandmother sent 

the scammers more than $70,000, costing her nearly all of her life 

savings. Mark contacted the Hotline to share his grandmother’s 

story, hoping it could be used to educate other seniors and prevent 

future scams. The Committee was ultimately able to connect Mark 

with a journalist who was interested in writing about his grandmother’s story to warn unsuspecting seniors of this scam. • Robert, a California resident, received a call from a scammer 

posing as his oldest grandson. He claimed he had been in an accident and was in a hospital in Mexico. He asked Robert for money 

to pay his hospital bill, which he said he had to do before he would 

be allowed to leave the country. Robert sent money, but he soon 

found out he was the victim of a scam. He contacted the Hotline 

to inquire about whether he might have any recourse. An investigator provided Robert with the contact information for the FTC, 

the ICE tip line and his state’s Attorney General. 

IV. HEALTH-RELATED SCAMS 

The Committee has sought to address the significant challenge 

of Medicare fraud with consistent oversight of the Department of 

Health & Human Services’ (HHS) fraud prevention efforts targeted 

at Medicare payments.32 Although estimating how much money is 

lost each year to Medicare fraud presents various challenges, there 

is no doubt the number is staggering, with one estimate of $60–$90 

billion.33

In March 2014, the Committee held a hearing titled: ‘‘Preventing 

Medicare Fraud: How Can We Best Protect Seniors and Taxpayers?’’ 34 The hearing highlighted expanded authority granted by 

the Affordable Care Act to the Centers for Medicare and Medicaid 

Services (CMS) to use in its fight against fraud. The cost of MediVerDate Sep 11 2014 02:11 Jan 01, 2015 Jkt 049010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\SR305.XXX SR305

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35Sid Kirchheimer, ‘Free’ Medical Alert Device Offers Harm, Not Help, AARP Bulletin (July 

2013) (online at http://www.aarp.org/money/scams-fraud/info-07-2013/free-medical-alert-deviceoffers-hurt-more-than-help.html) 36Gitte Laasby, Robocalls Targeted Elderly, Shut-Ins, Milwaukee Journal Sentinel (Jan. 2014) 

(online at http://www.jsonline.com/watchdog/pi/judge-halts-suspected-medical-alert-device-scamb99182956z1-239947171.html) 37The Medicare Rights Center is a national nonprofit consumer organization that provides information on Medicare rights and benefits. 

care fraud, however, is not limited to the number of dollars lost, 

and the Hotline is a reminder of the toll Medicare fraud can take 

on the life of a vulnerable senior. 

The majority of health-related scams reported to the Hotline involve seniors receiving fraudulent calls about medical alert devices. 

A medical alert device is an electronic device, typically worn on a 

bracelet or necklace, which is used to alert responders of an emergency situation. Medical alert device scammers attempt to collect 

personal information or convince a senior to pay for a device or 

service he never ordered.35 If collected, personal information will 

likely be used in identity theft schemes, such as opening lines of 

credit in a victim’s name or redirecting a victim’s Social Security 

benefits. 

A typical medical alert device scam begins with an automated 

phone call informing the target that someone, usually a family 

member or friend, has ordered a medical alert device for the senior. 

The recording explains that the device has already been paid for, 

and sometimes free groceries are offered as an added incentive. A 

phone menu gives the target the option of opting out—which likely 

only confirms that the phone number is active—or speaking to a 

representative about confirming delivery. If the target chooses the 

latter, the representative will tell the victim that, although the device has already been paid for, he must provide payment for 

monthly or annual operating fees. This fee may be as much as $35 

a month.36 The scammer may also claim that personal information 

is needed to confirm delivery. 

The medical alert device scammers should not be confused with 

companies that legitimately provide real services. Unlike scammers 

pretending to offer a service as a way to gain personal information 

and payment, legitimate companies provide real equipment and 

services, and they charge only for systems customers have actually 

ordered. Legitimate companies are usually registered with organizations like the Better Business Bureau and do not solicit through 

an automated phone call. 

Depending on the category of scam reported, investigators may 

direct victims to a variety of resources; for example: 

• Callers wishing to report suspected cases of Medicare fraud, 

waste or abuse may be referred to the HHS Office of the Inspector 

General (OIG), which accepts tips and complaints about potential 

fraud, waste, abuse and mismanagement in the agency’s programs. 

• If a caller has questions or concerns regarding billing, and the 

investigator is unable to assist him, he may be encouraged to contact CMS or the Medicare Rights Center.37

• Callers reporting medical alert device scams may be referred 

to their state Attorneys General, the FTC and the Federal Communications Commission (FCC). 

Health-related scam victims include: 


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38 IRS, Identity Protection Tips (October 2014) (online at http://www.irs.gov/uac/Identity-Protection-Tips) 39 U.S. Department of Education Office of Inspector General, How Identity Theft Happens 

(July 2009) (online at http://www2.ed.gov/about/offices/list/oig/misused/how.html) 40 Ben Popken, ID Theft Tops FTC’s Consumer Complaint List, Today (Feb. 27, 2014) (online 

at http://www.nbcnews.com/business/consumer/id-theft-tops-ftcs-consumer-complaint-list-n40356) 41FTC, Consumer Sentinel Network Data Book for January–December 2013 (Feb. 2014) (online 

at http://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2013/sentinel-cy2013.pdf) 42Stopmedicarefraud.gov, Medical Identity Theft & Medicare Fraud, U.S. Department of 

Health and Human Services, HHS Office of the Inspector General, Center for Medicare and 

• Edward, a resident of Massachusetts, received a phone call 

from a health company claiming he was eligible for two knee braces 

under Medicare. This company had information about his Medicare, causing Edward to believe it was legitimate. Once the two 

knee braces arrived, they were not what Edward was told he was 

ordering and he is unable to use them. Medicare was charged 

$1,700. Edward is in desperate need of knee braces, but he will not 

be eligible to receive another pair for five years. Edward was referred by an investigator to the OIG and his State Health Insurance Assistance Program for further assistance. • Tom received phone calls from a company that claimed it was 

contacting him to arrange the delivery of the medical alert system 

he had ordered, even though he never ordered any such system. 

When this company called, his phone displayed ‘‘Alert’’ in the Caller ID field, which piqued his curiosity and led him to answer the 

phone. Fortunately, Tom was aware that these calls were part of 

a scam. Committee staff recommended that Tom register for the 

National Do-Not-Call Registry and then file complaints about any 

unsolicited calls. Tom was also advised to contact the FTC. • Sarah, a senior living in Colorado, received phone calls claiming a family member purchased a medical alert device for her. She 

received as many as 10 calls in a single day. It is difficult for Sarah 

to get to the phone, and she does not have Caller ID to screen these 

fraudulent calls. Sarah is in a constant state of frustration because 

she cannot stop the calls. An investigator encouraged Sarah to simply not answer these calls—as answering the calls will often only 

lead to more calls—and provided her with the contact information 

for the FTC. 

V. IDENTITY THEFT 

Identity theft occurs when a fraudster uses someone’s personal 

information without permission. Thieves access personal information through numerous means, including stealing a wallet, purse, 

or mail; posing as a legitimate company and requesting information 

in a phone or email scam; sifting through the trash; accessing information provided to an unsecured Internet site; and obtaining 

credit reports by posing as a landlord or employer.38 39 The FTC 

has reported identity theft as the number one consumer complaint 

for 14 years in a row.40 Additionally, of the total number of identity 

theft complaints in 2013, the FTC reported that 20 percent came 

from victims age 60 and older.41

Medical identity theft can occur when scammers pose as representatives of Medicare. If successful, the scammer will obtain a 

person’s Social Security number or Medicare number and use it to 

receive medical care, purchase drugs or submit fake billings to 

Medicare in the victim’s name.42 Among other tricks, scammers 


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Medicaid Services, and U.S. Department of Justice (online at http://www. stopmedicarefraud.gov/ 

toolkit/documents/fightback_brochure_rev.pdf) 43 Center for Medicare & Medicaid Services, Protect Medicare and You from Fraud (Aug. 2014) 

(online at http://www.medicare.gov/pubs/pdf/10111.pdf) 44FTC, FTC Announces Top National Consumer Complaints for 2013 (Feb. 2014) (online at 

http://www.ftc.gov/news-events/press-releases/2014/02/ftc-announces-top-national-consumer-complaints-2013) 45Government Accountability Office, Identity Theft: Additional Actions Could Help IRS Combat the Large, Evolving Threat of Refund Fraud (Aug. 2014) (online at http://www.gao.gov/assets/670/665368.pdf) 46 U.S. Senate Special Committee on Aging, Tax-Related Identity Theft: An Epidemic Facing 

Seniors and Taxpayers (April 10, 2013) (online at http://www.aging.senate.gov/hearings/tax-related-identity-theft-an-epidemic-facing-seniors-and-taxpayers) 

often ask the target to confirm certain personal information in 

order to supposedly receive information on Medicare services for 

which he is eligible. It is important to note that representatives of 

Medicare will never come to an individual’s home uninvited to sell 

products. Also, representatives of Medicare are not allowed to ask 

for a person’s Social Security number, bank account information or 

Medicare number over the phone.43

Tax-related identity theft is a growing variation of identity theft. 

Based on complaints reported to the FTC’s Consumer Sentinel Network during 2013, around 30 percent of identity theft complaints 

involved tax-related identity theft.44 A September 2014 Government Accountability Office (GAO) report found that in the 2013 filing season, the IRS paid out $5.2 billion to fraudsters, an increase 

of $1.6 billion from what the agency’s inspector general identified 

in the 2012 tax-filing season.45

The Committee held a hearing in April 2013 titled: ‘‘Tax-Related 

Identity Theft: An Epidemic Facing Seniors and Taxpayers.’’ 46 The 

hearing examined how fraudsters carry out their tax-related identity theft schemes and what taxpayers can do to protect their personal information. A victim of tax-related identity theft, Marcy 

Hossli, shared her story with the Committee. After receiving a letter from the IRS informing her she was the victim of tax fraud, Ms. 

Hossli spent three years trying to fix what had occurred. She 

reached out to several federal agencies to assist her, but she received no significant assistance. Chairman Nelson’s office was the 

first resource she contacted that actually helped to fix her problem. 

Based on information provided by victims, investigators may: 

• Encourage a victim to file a report with his local police department, which can be used to prove that he has been a victim of identity theft; 

• Advise a victim to establish a fraud alert with the national 

credit bureaus; 

• Direct a victim to the FTC to file an identity theft affidavit. The FTC will also provide the victim with information 

to better understand the process of repairing his identity and 

prevent against further compromises; 

• If the victim is a target of tax fraud, he will be encouraged 

to contact the IRS’s Identity Protection Specialized Unit or his 

local taxpayer advocate; and 

• If a Social Security number was obtained by a fraudster, 

the victim will be provided with the contact information for the 

SSA to report the theft of a Social Security number. 

Of the many reports of identity theft received by the Hotline, the 

following victims paid a significant price: 


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• Martha’s wallet was stolen and the perpetrator began using 

her information to accumulate $13,000 of debt in Martha’s name. 

Although she has filed a report with her credit card company and 

local police department, she has been unsuccessful in her attempts 

to remove this debt from her credit report. Martha contacted the 

Hotline for help in her dealings with the credit bureaus and assistance with how she might protect herself from a future compromise 

of her personal information. An investigator provided Martha with 

basic steps she could take to protect her personal information and 

directed her to the FTC for additional information on identity theft. 

The investigator also referred her to the Consumer Financial Protection Bureau and explained how it might be able to help her in 

her dispute with the credit bureaus. 

• Mindy’s mother, who lives in Missouri, was visited by a doorto-door salesman who claimed she could sign up for a service that 

would bring a doctor to her home to explain what Medicare services 

she was eligible to receive. Mindy’s mother signed the forms, which 

asked for her Social Security number and Medicare number. Mindy 

contacted the Hotline to receive assistance in preventing her mother from becoming the victim of identity theft. Mindy was referred 

to the SSA to report the theft of her mother’s Social Security number and Medicare number. An investigator further encouraged 

Mindy to contact the national credit bureaus and the FTC to file 

an identity theft affidavit. 

• Julie has been a victim of identity theft since 2007, when 

someone began using her name and Social Security number to 

apply for credit cards and loans. In 2011, a fraudulent IRS tax return was submitted using her name, home address and Social Security number. Julie contacted the Hotline looking for help with 

this matter with which she has struggled for years. An investigator 

referred Julie to the FTC to report the fraud and to file an identity 

theft affidavit. She was further referred to the SSA to report the 

fraudulent use of her Social Security number. She was also referred to the IRS’s Identity Protection Specialized Unit. 

VI. LOTTERY SCAMS 

An especially prevalent scam often targeted at unsuspecting seniors involves telephone calls and direct mail, usually originating 

overseas, that claim the targets have won a lottery. Scammers explain that victims must make an advanced payment to cover taxes 

or fees in order to claim their winnings. Scammers typically request payment via wire transfer, such as MoneyGram or Western 

Union, or ask the victim to purchase a prepaid debit reload card, 

such as the Green Dot MoneyPak. 

Over time, the scammer’s story evolves, with various excuses as 

to why the winnings have not been delivered. All the while, the 

fraudster continues to ask for additional payments. The scammer 

may assert that another winner has not claimed the jackpot, and, 

therefore, the victim is entitled to additional payments as soon as 

the additional taxes and fees are paid. According to data collected 

by the FTC’s Consumer Sentinel, there were nearly 90,000 consumer complaints regarding prizes, sweepstakes and lottery scams 


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47FTC, Consumer Sentinel Network Data Book for January–December 2013 (Feb. 2014) 

(online at http://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-databook-january-december-2013/sentinel-cy2013.pdf) 48 U.S. Department of Homeland Security’s Immigration and Customs Enforcement, U.S. 

and Jamaica Launch International Task Force to Combat Telemarketing Fraud (May 27, 2009) 

(online at http://www.ice.gov/news/releases/0905/090527kingston.htm) 49See, e.g., Department of Justice, Jamaican DJ Arrested in Florida in Connection with 

North Dakota Telemarketing Lottery Scam; 26 Individuals Currently Indicted (May 27, 2014) 

(online at: http://www.justice.gov/usao/nd/news/2014/05-27-14-Willcocks%20Arrested.html) 50 AARP, AARP Fraud Fighter Call Center Dials in on Scams (Feb. 2, 2014) (online at 

http://states.aarp.org/aarp-fraud-fighter-call-center-dials-in-on-scams/) 51 Caribbean Policy Research Institute, Background Brief: Jamaican Lottery, p. 5 (Nov. 

2012), (online at http://www.capricaribbean.org/sites/default/files/text/ 

FINAL_Background%20Brief_Jamaican%20Lottery%20Scam_November%202012.pdf) 52Federal Communications Commission, Caller ID and Spoofing (online at http:// 

www.fcc.gov/guides/caller-id-and-spoofing) 53 U.S. Senate Special Committee on Aging, 876–SCAM: Jamaican Phone Fraud Targeting 

Seniors, Testimony of Kim Nichols (March 13, 2013) (online at http://www.aging.senate.gov/imo/ 

media/doc/01_Nichols_3_13_13.pdf) 

in 2013.47 Individual victim losses reported to the Hotline have 

ranged from a couple hundred dollars to over $500,000. 

Investigators may refer victims of lottery scams to: 

• The FTC; 

• The Department of Homeland Security’s ICE tip line. ICE 

investigates cross-border crimes and leads the Jamaican Operations Linked to Telemarketing (JOLT) task force, a multiagency, international task force established with the goal of 

eradicating lottery scams; 48

• The U.S. Postal Inspection Service, which investigates 

fraudulent use of the nation’s mail system and has a history 

of actively pursuing lottery scammers; 49 and 

• The AARP Fraud Fighter Call Center, which is staffed 

with caseworkers who are well-versed in speaking with victims 

and their families who are dealing with the effects of lottery 

scams; 50

a. Jamaican Lottery Scams 

A sophisticated and common variation of the lottery scam is 

known as the Jamaican lottery scam. In 2012, it was estimated 

that scammers in Jamaica placed 30,000 calls daily to older Americans in an effort to swindle them out of their life savings.51 Frequently, the phone numbers displayed on Caller ID will begin with 

area code 876, which is Jamaica’s country code, but is also often 

confused with an American toll-free phone number. More sophisticated scammers, however, are able to ‘‘spoof ’’ Caller ID so that a 

U.S. number appears, even if the scammer is calling from overseas.52 These scammers are often relentless in their pursuit of 

money. The daughter of a victim of the Jamaican lottery scam, who 

testified at the Committee’s March 2013 hearing on the topic, explained that her father would sometimes receive 85 to 100 calls per 

day.53 At times, scammers have also been known to threaten harm 

to a victim or his or her family. They may use readily available 

technology, such as Google Earth, to view images of a victim’s 

home and neighborhood. Using this information, they can reference 

the appearance of the victim’s home or a nearby landmark, making 

the scammer’s claims that he or she is nearby much more believable. 

According to the FTC, in 2007, there were 1,867 complaints related to Jamaican lottery scams; by 2011, the figure had ballooned 


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54 Caribbean Policy Research Institute, Background Brief: Jamaican Lottery, p. 5 (Nov. 

2012) 55 Id. at p. 5–p. 6 (Nov. 2012) 56David McFadden, Jamaican Lottery Scams Spread Despite US Crackdown, The Associated Press, (April 2012) (online at http://www.businessweek.com/ap/2012-04/D9U6Q1O00.htm) 57 Id. 58 U.S. Senate Special Committee on Aging, 876–SCAM: Jamaican Phone Fraud Targeting 

Seniors, Testimony of Kim Nichols (March 13, 2013) (online at http://www.aging.senate.gov/imo/ 

media/doc/01_Nichols_3_13_13.pdf) 59 U.S. Senate Special Committee on Aging, 876–SCAM: Jamaican Phone Fraud Targeting 

Seniors, Testimony of Sonia Ellis (March 13, 2013) (online at http://www.aging.senate.gov/ 

download/2013/03/13/sonia-ellis-testimony-031313) 60Ledyard King, U.S. Authorities Tell Nelson Indicted Jamaican Scammers will be Extradited, Florida Today (April 25, 2013) (online at http://www.floridatoday.com/article/20130424/ 

NEWS01/130424027/U-S-authorities-tell-Nelson-indicted-Jamaican-scammers-will-extradited) 61 U.S. Senate Special Committee on Aging, Lawmakers Press Justice Department to Extradite Lottery Scammers (March 15, 2013) (online at http://www.aging.senate.gov/press-releases/ 

lawmakers-press-justice-department-to-extradite-lottery-scammers) 

to more than 30,000 complaints.54 Experts believe that as many as 

90 percent of the victims of this scam do not report their experience 

to authorities, often due to embarrassment and shame.55 As a result of the underreporting of this scam, it is difficult to measure 

how much money has been taken from victims. According to some 

estimates, victims lost $300 million in 2011, up from $30 million 

in 2008, to Jamaican lottery scams.56 An FTC official stated that 

prize and lottery scams worldwide could be bilking Americans out 

of as much as $1 billion a year.57

In the Committee’s hearing to examine the Jamaican Lottery 

Scam, the stories of two victims of the scam were shared by their 

families: 

• Kim Nichols told the heartbreaking story of her father, a retired commercial airline pilot who flew for 36 years after proudly 

serving in the U.S. Armed Forces. Over the course of approximately 

five months, the scammer defrauded Ms. Nichols’ father out of 

$85,000.58

• After learning that her mother was sending money to 

fraudsters located in Jamaica in hopes of claiming a $4.2 million 

lottery, Sonia Ellis had to file for legal guardianship to protect her 

mother’s remaining assets. From December 2008 to July 2012, 

Sonia’s mother sent approximately $64,500 to scammers.59

A local sheriff, officials from ICE and the U.S. Postal Inspection 

Service, and a representative of a wire transfer service often used 

by victims to transmit money to scammers all shared their efforts 

to bring an end to the scam. The hearing also sought to press the 

Department of Justice (DOJ) to work toward extraditing perpetrators of the crime to the United States for trial. Chairman Nelson 

explained that such an action would have a chilling effect on those 

who now commit the crime with a sense of impunity.60 Following 

the hearing, on March 15, 2013, Chairman Nelson and Ranking 

Member Collins wrote a letter to U.S. Attorney General Eric Holder in which they expressed their concern over the ‘‘lack of attention’’ being paid to the Jamaican lottery scams and urged the DOJ 

to work toward extraditing lottery scammers from Jamaica.61


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62 Jamaica Information Service, More Than 100 Scammers Arrested (Feb. 6, 2014) (online 

at http://jis.gov.jm/10009scammers-arrested/) 

According to the Jamaican government, as of February 2014, 

more than 100 arrests had been made under the anti-lottery 

scamming law, which was passed in 2013.62 To date, no lottery 

scammers living in Jamaica have been extradited to the U.S. for 

prosecution. 

The following are lottery scam victims who contacted the Hotline 

to report their experiences: 

• William called the Hotline with concern over his father, who 

is continually bombarded via phone and mail by fraudsters who 

claim he has won $2.5 million. Since 2012, he has wired close to 

$200,000 to these scammers in an effort to claim his supposed 

winnings. Despite William’s efforts to convince his father that it is 

all a scam, his father continues to believe he is the winner of $2.5 

million. An investigator provided William with contact information 

for ICE, the U.S. Postal Inspection Service, and the AARP Fraud 

Fighter Call Center. The Committee also sent him a letter with information about the scam so that William could share something 

concrete with his father. 

• Ethan’s father, a retired attorney, fell victim to the Jamaican 

lottery scam. Although Ethan was granted temporary conservatorship over his father’s finances, his father continues to send whatever money he can accumulate to the scammers, who call him multiple times a day from Jamaican phone numbers. According to 

Ethan’s calculations, his father has lost over $500,000 to this scam. 

An investigator referred Ethan to the AARP Fraud Fighter Call 

Center and to the ICE tip line. Ethan was also provided the link 

to the Committee’s hearing for more information on the Jamaican 

lottery scam. 


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63 Center on Budget and Policy Priorities, Social Security Keeps 22 Million Americans Out of 

Poverty: A State-By-State Analysis (Oct. 2013) (online at http://www.cbpp.org/cms/ 

?fa=view&id=4037) 

• After discovering her parents lost $180,000 to the Jamaican 

lottery scam, Alice had to take over her parents’ finances and confiscate their phones. After sending most of the money they had 

saved for retirement, Alice’s parents eventually sold their home to 

send the proceeds to the scammers. Alice’s father passed away soon 

after finding out it was a scam, and her mother is still in denial. 

An investigator spoke with Alice and provided her with the contact 

information for the ICE tip line, the AARP Fraud Fighter Call Center and to Western Union’s Fraud Hotline since a majority of the 

money was sent using Western Union’s wire transfer service. Furthermore, the investigator spoke with a sergeant at the county police department to follow up with Alice and ensure all steps have 

been taken to investigate the scam. 

• Elizabeth from Florida is receiving numerous calls a day from 

Jamaican lottery scammers. She has not fallen victim to this scam, 

but she is worried her neighbors have. Although she knows this is 

a scam and has asked the scammers to stop calling, they continue 

to call her daily. She has contacted her local telephone company, 

and they have tried to stop the phone calls; however, as soon as 

she blocks one phone number, the scammers begin calling from a 

new number. Elizabeth was provided with contact information for 

the ICE tip line and the FTC. She was also sent the Committee’s 

Jamaican lottery scam letter for information on this scam to share 

with her neighbors. 

VII. SOCIAL SECURITY FRAUD 

As Social Security payments have moved from mailed checks to 

electronic payments via direct deposit or debit card, a new type of 

fraud has emerged. Fraudsters use banks and debit cards to set up 

accounts to which they can re-route Social Security benefits from 

the rightful recipients to these fraudulently created accounts. As of 

November 30, 2014, the SSA Office of Inspector General (SSA OIG) 

reported it had received more than 42,000 allegations of questionable changes to a beneficiary’s account. Many seniors rely on Social 

Security benefits for a large percentage of their income, resulting 

in drastic changes in everyday life for a senior who is the victim 

of Social Security fraud. Almost 90 percent of people age 65 and 

over receive some of their family income from Social Security, and 

without Social Security benefits, 44.4 percent of Americans 65 and 

over would have incomes below the poverty line.63 Without their 

monthly benefits, these seniors would be unable to purchase basic 

day-to-day necessities. 

The SSA OIG found that fraudsters most commonly make 

changes to the way in which Social Security benefits are to be paid 

through financial institutions, often directing the benefits to prepaid debit cards. Fraudsters also go online to establish a My Social 

Security account, which is an online tool that allows Social Security 

recipients to access information about their benefits and change 

payment information. As of January 2013, SSA reported that more 


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64 U.S. Senate Special Committee on Aging, Social Security Payments Go Paperless: Protecting 

Seniors from Fraud and Confusion (June 19, 2013) (online at http://www.aging.senate.gov/imo/ 

media/doc/05_SSA_IG_O’Carroll_6_19_13.pdf) 65 Almost all Social Security beneficiaries have been required to receive their Social Security 

benefits electronically since March 1, 2013 (see explanation at http://www.ssa.gov/deposit/) 

than 22,000 potentially fraudulent My Social Security accounts had 

been opened.64

On June 19, 2013, the Committee held a hearing titled ‘‘Social 

Security Payments Go Paperless: Protecting Seniors from Fraud 

and Confusion.’’ The hearing examined what actions have been 

taken by SSA and the Treasury Department to prevent Social Security benefit fraud during the transition to electronic payments.65

Callers reporting Social Security fraud may be handled in the following ways: 

• In cases where their Social Security benefits were fraudulently misappropriated, victims who require their benefits to 

pay for basic necessities are directed to their local SSA office 

to file for what is known as a critical payment, which usually 

provides a beneficiary with a paper check on the spot; and 

• Callers who suspect fraudulent use, waste or abuse in Social Security programs and operations are encouraged to contact the SSA OIG to file a report. 

The Hotline reports of Social Security fraud include the following: 

• A Florida senior named Julia discovered that her daughter had 

been taking her Social Security disability benefits for months, so 

she opened a new bank account and requested that her benefits be 

deposited to that account. When Julia’s daughter learned that her 

mother had set up a separate account, she contacted SSA to again 

redirect the benefits back to the old account. Julia’s relative contacted the Hotline in search of information about how she could 

stop Julia’s daughter from continuing to steal her benefits. An investigator referred Julia’s relative to Julia’s local SSA office and 

advised her to request that a freeze be placed on Julia’s Social Security account, which will prevent any future changes to the account information unless Julia physically visits her local SSA office. Further, she was provided with the contact information for the 

SSA OIG to report the fraudulent use of her Social Security benefits. • Anna became worried that she was the victim of Social Security fraud when her monthly benefit did now show up in her bank 

account. Anna contacted SSA and found out that someone had 

changed the address and direct deposit information on her account. 

Anna is a senior living in Arizona who depends on her monthly Social Security benefits to pay for rent and groceries. Anna was referred by an investigator to her local SSA field office, where she 

could place a freeze on her account and file for a critical payment. 

She was also encouraged to contact the SSA OIG to report the 

fraudulent use of her Social Security benefits. • After receiving a letter thanking him for opening an online account with Social Security, James, an Illinois resident, realized he 

was a victim of Social Security fraud. A scammer had created a My 

Social Security account in his name and then used it to request 

that his Social Security check be direct deposited into a bank account located in another state. Because James was proactive and 


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66 Herb Weisbaum, Timeshare Resale Scams Take In Millions, Today Money (April 2012) (online at http://www.today.com/money/timeshare-resale-scams-take-millions-667476) 67FTC, Consumer Sentinel Network Data Book for January–December 2013 (Feb. 2014) (online 

at http://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2013/sentinel-cy2013.pdf) 68Susannah Nesmith, Florida, U.S. Crack Down on Timeshare Fraud, Bloomberg (June 2013) 

(online at http://www.bloomberg.com/news/2013-06-06/florida-prosecutors-say-191-timesharecases-filed-in-crackdown.html) 69 Andrea Day and Valerie Patriarca, Dream Vacation Turned Timeshare Nightmares, CNBC 

(March 20, 2014) (online at http://www.cnbc.com/id/101488801) 

contacted the SSA immediately, the fraud was discovered and his 

local Social Security office was able to correct the information. 

James contacted the Hotline to share his experience. 

VIII. TIMESHARE SCAMS 

Given the significant drop in the value of numerous timeshares 

in recent years, many timeshare owners are desperate sell their 

units, especially older Americans, who may no longer be able to use 

a timeshare, but must continue to pay the compulsory annual 

maintenance fees. Scammers contact timeshare owners claiming to 

have found someone interested in buying the timeshare. The owner 

is told he must simply pay transfer fees and closing costs, which 

the scammer may claim will be refunded upon completion of the 

sale. Victims pay anywhere from a few hundred to many thousands 

of dollars in hopes of closing the sale. According to Lois Greisman, 

the Associate Director of the Division of Marketing Practices at the 

FTC, ‘‘there are tens of millions of dollars being bilked from people 

who are trying to unload their properties because they need the 

money.’’ 66

In 2013, the FTC Consumer Sentinel logged 30,094 complaints 

related to travel, vacations and timeshare plans.67 In a two-year 

period, U.S. and Florida officials filed nearly 200 civil and criminal 

cases in the state of Florida.68 One case, brought by the Southern 

District of Illinois U.S. Attorney’s Office, involved a massive 

timeshare fraud that bilked more than 22,000 victims from 50 

states out of over $30 million.69 The fraud ring grew from four employees to nearly 300, with nine locations across Florida. Losses to 

timeshare scams reported to the Hotline have ranged from $250 to 

over $19,000. 

Victims of a timeshare scam are typically encouraged to report 

the fraud to: 

• The office of their state Attorney General and any relevant 

state consumer protection agency; 

• The FTC; an 

• The IC3, if the victim responded to an Internet ad for 

timeshare resale services. 

Complaints to the Hotline include: 

• Susan in Virginia reported receiving a call from an individual 

claiming to be from the company ‘‘Timeshares by Owner,’’ who said 

he had a buyer ready to purchase her timeshare and needed a payment of $1,500 to cover closing costs. She was even placed on the 

phone with an individual who claimed he was the interested buyer, 

but, as soon as she sent a payment, the scammer stopped answering her calls. An investigator provided Susan with contact information for the FTC and the Virginia Attorney General’s office. 


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70See U.S. Social Security Administration, Digest of State Guardianship Laws (Aug. 2012) (online at https://secure.ssa.gov/poms.nsf/lnx/0200502300) 71 U.S. Department of Justice, Elder Justice Initiative (online at http://www.justice.gov/ 

elderjustice/) 72 A representative payee is appointed by a Federal agency to handle the benefits of an incapacitated individual 

• Marge in Florida was repeatedly victimized by scammers 

claiming to have buyers lined up for her timeshare. She explained 

to an investigator that her desperation to get rid of the timeshare 

led her to believe the fraudsters as they kept asking for additional 

payments to ensure the sale could be finalized. She eventually lost 

approximately $10,000, and her timeshare was never sold. Marge 

was advised to report this scam to her Attorney General’s office, 

the Florida Department of Agriculture and Consumer Services and 

the FTC. 

IX. FRAUD INVOLVING GUARDIANSHIP 

The purpose of a court-appointed guardianship is to protect and 

exercise the legal rights of an individual who has been deemed to 

lack the capacity to handle his or her own affairs. A guardian can 

be a family member or friend, a public guardian appointed by the 

state, or a private guardian if the individual is able to provide compensation. State courts are responsible for overseeing guardians, 

and laws pertaining to guardianships may vary greatly from one 

state to another.70 Individuals have contacted the Hotline to share 

heartbreaking stories of the abuses they have witnessed within the 

guardianship system, typically involving financial abuse of an elderly individual. 

Individuals who have contacted the Hotline for assistance with 

guardianship issues are often referred to state authorities. The Department of Justice’s Elder Justice Initiative is also a valuable resource, providing state-by-state information for victims of financial 

exploitation and their families, practitioners who serve them, and 

prosecutors and law enforcement agencies.71

Individuals who have contacted the Hotline include: 

• Alexandra, a resident of Missouri, explained that her father 

was placed under a temporary guardianship. While under the care 

of the guardian, Alexandra’s father’s assets were squandered and 

necessary medical care was not provided. Alexandra has contacted 

law enforcement and shared the evidence she has collected of the 

abuse inflicted by the guardian. 

• Elaine, a resident of North Carolina, said that her sister’s lies 

led to a court-appointed guardianship for her father. Elaine claims 

the guardian drugged and abused her father and sold his home for 

$1.5 million, taking all the money for himself. While one state organization says it is investigating what happened to Elaine’s father, no action has been taken by state or federal authorities. 

• Jim, an attorney in Florida, contacted the Hotline because he 

believed the Social Security benefits of a client were being misappropriated by a representative payee,72 the client’s brother. The 

brother is a convicted felon but neglected to notify anyone of this 

fact when he sought to become his brother’s representative payee. 

Although the beneficiary was deemed mentally impaired, a bank 

account was set up in such a way as to ensure that, even after the 

beneficiary passed away, the benefits would remain in his possesVerDate Sep 11 2014 02:11 Jan 01, 2015 Jkt 049010 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\SR305.XXX SR305

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73 Allianz Life Insurance Company of North America, 2014 Safeguarding Our Seniors, New 

Allianz Life Study Confirms Elder Financial Abuse Under-Reported and Misunderstood Problem 

Likely to Grow (Oct. 15, 2014) (online at https://www.allianzlife.com/about/news-and-events/ 

news-releases/Press-Release-October-15-2014) 74 U.S. Senate Special Committee on Aging, Private Industry’s Role in Stemming the Tide of 

Phone Scams, Testimony of Steven W. Streit and Skeet Rolling (Nov. 19, 2014) (online at http:// 

www.aging.senate.gov/hearings/private-industrys-role-in-stemming-the-tide-of-phone-scams) 75 U.S. Senate Special Committee on Aging, Private Industry’s Role in Stemming the Tide of 

Phone Scams, Testimony of William Y. Tauscher (Nov. 19, 2014) (online at http:// 

www.aging.senate.gov/imo/media/doc/Tauscher_11_19_14.pdf) 

sion instead of passing to the estate. A Committee investigator put 

Jim in touch with one of Chairman Nelson’s caseworkers in Florida 

and also advised Jim to contact the SSA OIG. 

X. CONCLUSION 

It is clear that more needs to be done to help seniors protect 

themselves from scams and the financial exploitation that accompanies them. With the aging of the American population, the problems highlighted in this report will only continue to grow.73 Information gathered through the Hotline and the resulting work of the 

Committee have already brought about some important successes. 

For example, after sustained Committee pressure, two of the three 

primary providers of prepaid debit reload products, Green Dot and 

InComm, announced their plans to distoninue the PIN method of 

reloading prepaid cards by the end of the first quarter of 2015, citing concerns over the extent to which scam artists were utilizing 

them in their fraud schemes.74 The third provider, Blackhawk, also 

recently unveiled enhanced security measures that it believes will 

mitigate the risks posed by fraud.75 However, as illustrated by the 

continued daily reports of fraud to the Hotline, much more work remains to be done. The Hotline provides a glimpse into the current 

state of scams against older Americans—information that the Committee hopes will not only raise awareness of the extent of this 

scourge, but also inform the conversation as possible solutions are 

considered. 


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